PICC Group’s Profit Rises as Premiums, Investment Income Climb

People’s Insurance Company (Group) of China Ltd. (1339), parent of the nation’s biggest non-life insurer, said profit rose 53 percent in the first half as investment and premiums income expanded.

Net income increased to 7.54 billion yuan ($1.23 billion), or 0.18 yuan a share, from 4.92 billion yuan, or 0.14 yuan a share, a year earlier, Beijing-based PICC Group, as the company is known, said in a statement to the Hong Kong stock exchange.

Chairman Wu Yan boosted premiums income in the first half amid the nation’s economic slowdown after raising HK$24 billion ($3.1 billion) in an initial public offering in Hong Kong in November to fund its business expansion. Premiums income at PICC Property & Casualty Co. (2328), the main revenue contributor, climbed 14 percent to 115.3 billion yuan as underwriting profit grew and investment income increased, the non-life unit said in a separate statement.

“Underwriting profit should increase as premiums grow, although margins probably narrowed” as competition in the property insurance market intensified, Fanny Chen, a Hong Kong-based analyst at Haitong International Securities Group, said before the announcement. “Insurers also face much smaller pressures from impairments this year after last year’s huge write-downs.”

PICC P&C’s combined ratio, used to gauge claims and expenses as a percentage of premiums earned, rose 1.2 percentage point from the record-low 92.4 percent in the first half of last year to 93.6 percent, according to the statement. Lower combined ratio means higher profitability.

Insurance Unit

Gross premiums at PICC P&C jumped 14 percent, while revenue at the group’s life insurance unit dropped 12 percent as higher-return wealth management products offered by banks dwarfed the appeal of insurance products, according to data from China Insurance Regulatory Commission.

Total income from investments rose to 15.34 billion yuan from 10.26 billion yuan a year earlier, PICC group said. Net investment income, mainly comprised of interest and dividends, gained 21 percent to 12.61 billion yuan.

PICC Group’s stock rose 1.9 percent to HK$3.74 in Hong Kong, trimming this year’s loss to 4.4 percent. PICC P&C rose 2.1 percent today to HK$9.79. China Pacific Insurance (Group) Co., which reported a 2.2 percent increase in net premiums yesterday, rose 1.5 percent to HK$27.25.

China Life Insurance Co. said July 30 that first-half profit may rise by more than 50 percent as investment income rose and impairment losses fell. The nation’s biggest life insurer recorded 31.1 billion yuan of such write-downs last year, jumping 140 percent from the previous year.

To contact Bloomberg News staff for this story: Zhang Dingmin in Beijing at dzhang14@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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